Encrypting File System (EFS) provides the core file encryption technology used to store encrypted files on NTFS file system volumes. Once you encrypt a file or folder, you work with the encrypted file or folder just as you do with any other files and folders.

Encryption is transparent to the user that encrypted the file. This means that you do not have to manually decrypt the encrypted file before you can use it. You can open and change the file as you normally do.

Using EFS is similar to using permissions on files and folders. Both methods can be used to restrict access to data. However, an intruder who gains unauthorized physical access to your encrypted files or folders will be prevented from reading them. If the intruder tries to open or copy your encrypted file or folder he receives an access denied message. Permissions on files and folders do not protect against unauthorized physical attacks.

You encrypt or decrypt a folder or file by setting the encryption property for folders and files just as you set any other attribute such as read-only, compressed, or hidden. If you encrypt a folder, all files and subfolders created in the encrypted folder are automatically encrypted. It is recommended that you encrypt at the folder level.

For more information, please see: Encrypting File System overview.

Data Recovery Wizard can retrieve EFS - encrypted files from NTFS partitions. To retrieve the files, encryption password must be known or SAM database must be present (Windows 2000, XP, 2003, VISTA). User must have administrator privileges. The green "sample2.txt" is an encrypted files of NTFS drive.

Note:
Does not work with FAT partitions. All recovered encrypted files must be copied to NTFS partition.
Must work on present Windows system.
Does not support Dynamic Disks.
Does not work on files invisible due to user's access rights.

See more: Encrypting File System in Windows XP and Windows Server 2003.

The demo version of Data Recovery Wizard gives you a much fairer idea about chances of data recovery from your hard disk before deciding upon the purchase. You can buy full version to recover data!